Guest Post: Malta Can Capitalise On Rising Eastern European Interest To Purchase A Second Property
As a result of rising interest rates and inflation, many individuals have decided to purchase property abroad.
People from Central and Eastern Europe prefer countries with warmer climates, such as Spain and Malta but what real estate are they buying?
A while ago, we noticed that a large number of foreign clients were contacting us, but they were still exploring other foreign markets, reading about legal terms and costs, and asking questions.
After the invasion of Ukraine, many who had been on the fence about purchasing property decided to do so instantly.
Being in this industry, we always investigate how similar situations are reflected in other countries. There are a large number of private individuals, particularly from Poland or the Baltic States, who are interested in purchasing real estate in warm countries. Spain and Portugal emerged victorious in this competition.
The information I obtained from Spain and Portugal indicates an increase in the activity of the wealthiest individuals in those nations. This appears to be a new trend, with local developers from countries located near conflict zones requesting tax relief on housing to retain some capital in a slowing market of Eastern Europe.
New realities prompted individuals from indirectly most-affected regions to invest in foreign real estate in more distant countries, particularly those that, for geographically obvious reasons, offer living standards that cannot be found in central-eastern continental Europe, for instant pleasant weather, on which they cannot always depend. A weekend planned to spend by the lake, for example, can easily be ruined by rain there.
A second reason for this decision is the increase in property prices in markets with particularly high inflation, which has rendered the purchase of real estate there unattractive.
Malta is ideally situated to compete for the attention of such investors, given our extensive experience and ability to guide prospective buyers and assist them in the purchasing process, as well as our constant enjoyment of the warm, blue waters.
Is it all worth it?
A second home on the coasts of a warm sea can sometimes be less expensive than a comparable property in those countries.
When speaking with analysts, we discover that the profitability of investment ranges from 3-7% per year, which exceeds the return on currently available bank deposits, making buying property abroad worthwhile.
Why purchase property in a foreign country?
I believe the primary reason is to protect people’s savings. Times appear to be uncertain, and everyone should consider diversifying their investments.
People who purchase property in countries such as Malta, Spain, or Portugal (or elsewhere in general) ensure that they have additional, secure support in the event of market fluctuations. Naturally, property near the sea draws the most attention.
Clients are interested in recreational features, but they are also interested in the opportunity to rent to the many tourists visiting Malta.
Beautiful weather all year, very friendly and hospitable locals, a low crime rate, very good private and public health care, Mediterranean architecture, islands surrounded by clean Mediterranean water, good education based on the British experience, a stable property market, daily flights to major European countries, low taxes. Since few countries can provide these conditions, Malta, in my opinion, can successfully capitalize on this interest.
How much does it cost?
Purchasing real estate in Malta is both highly specific and relatively straightforward. A permit known as an AIP (Acquisition of Immovable Property) is required to purchase property in Malta, but it is not necessary to be a Maltese resident.
There is a fee, and you can anticipate receiving your permit within 35 days.
The average price of property in Malta per square metre is around €5,000, compared to €4,400 in France and €4,700 in Austrian ski resorts.
You pay less in Italy, where an attractive property can be obtained for €2,200 per m2, and in Spain, where flats average nearly €2,500 per m2, with Bulgaria being the cheapest at around €600 per m2.
And who is buying it all?
There are an increasing number of wealthy people in Eastern Europe and it is not uncommon for the wealthy to own multiple properties purchased for both investment and personal use.
Entrepreneurs, private individuals interested in buying to rent, families with children, and expatriates living permanently in other Western European countries are currently buying the most property abroad.
As a result, my forecasts remain unchanged, and I am very optimistic for the next few years. The real estate market in Malta is this strong and fortunately affected by the high demand
from those new eastern trends, and we will assist and advise them all.
Arlent Ashiku is a property consultant and real estate specialist at Zanzi Homes.
Lovin Malta is open to interesting, compelling guest posts from third parties. These opinion pieces do not necessarily reflect the views of the company. Submit your piece at [email protected]
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